Interest rate reduction on mortgage loans
Banks are responding to the climate of caution among households as regards taking out a loan with new cuts in mortgage rates, in a bid to spark the interest of potential new buyers. They are also extending, until the end of the year, the interest rate freeze in force since last May for existing borrowers.
Kathimerini understands that there will be a restraint of interest rates at the level of 2.70-2.80% plus the bank’s margin, for all loans previously taken out with a variable rate. The measure was decided last May with effect for one year and applied to all current borrowers who saw their loan installment frozen at the May 2023 level as banks absorbed the new Euribor increases.
The freeze has helped contain the cost of servicing the installments for around 450,000 mortgages totaling €19.5 billion. The extension of the scheme until the end of 2024 is considered a done deal by the banks.
Speaking to Skai TV on Wednesday, National Economy Minister Kostis Hatzidakis said that “we cannot imagine that the banks will not extend the lower charges for mortgage loans, which they had adopted last year for a year.”
As for new borrowers, the banks’ intervention will concern long-term fixed rates – i.e. 20 to 30 years – with current interest rates between 4.60-5.10%. They are expected to be further reduced close to 4.30-4.90%, to make them even more attractive for households that choose to lock in their loan installment for a long period of time.
Banks are also geared toward reducing their spread over the Euribor for the floating interest rates applied after the fixed rate period. The margin is expected to fall to close to 2% and, given the prospect of a deceleration of the ECB base rate and Euribor, will also entail a reduction in the floating rates for the housing market.
